“Long-tailed business often means that CEOs contend with the long-lasting ramifications of their predecessors,” according to the research firm.
Deutsche Bank Markets Research analyst Yaron Kinar found that the CEOs of AFLAC Incorporated (NYSE:AFL) and Unum Group (NYSE:UNM) emerged as the only two outperformers from a total return perspective. Both insurance companies have the longest-standing CEOs, who outperformed the group average total return over their current CEOs tenures.
Kinar emphasized that the stories of the CEOs of AFLAC Incorporated (NYSE:AFL) and Unum Group (NYSE:UNM) are both complex.
“We recognize that a CEO that was brought in to turn around a struggling company (Unum) may show more impressive growth than a CEO that took over a smoothly-run operation (Torchmark),” wrote Kinar.
Aflac CEO outperforms in pre-2008
Kinar said Daniel Paul Amos, CEO of AFLAC Incorporated (NYSE:AFL) achieved his outperformance across most measures he measured before 2008. Dan Amos led the insurance company since 1990.
According to Kinar, his responsibility for the results of AFLAC from 1990 to pre-2008 was more evident. However, Kinar noted that Aflac’s track record since has been less stellar. During the start of Amos’ tenure, Aflac’s total return was 414% and went up to 3,586% three months after he became assumed his position.
Unum Group CEO outperforms in total return metrics
Thomas R. Watjen is the current CEO of Unum Group (NYSE:UNM). According to Kinar, Unum’s CEO outperformed in the crucial total return metrics and ROE improvement. His performance indicated a successful turnaround. At the start of his tenure, the company’s total return was 314% and went up to 361%, three months after his start date.
The analysts noted, however, that Unum Group (NYSE:UNM) is still behind the group average ROE as its long-tailed closed block continues to offset string on-going operations. Kinar said, “It is difficult to measure.
Other CEO performances
Kinar said Metlife Inc (NYSE:MET) underperformed under its CEO Steven A. Kandarian. The analysts noted that many of the challenges currently faced by the company came before his tenure, but many continue to criticize his early communications with investors. They also disapprove the absence of shares buyback under his tenure.
Kandarian became CEO of Metlife Inc (NYSE:MET) after Robert Henrikson retired from his position in 2011.
On the other hand, Larry Zimpleman, CEO of Principal Financial Group Inc (NYSE:PFG) is transforming its business into a less capital fee intensive model. Kinar observed that its investors seemed “more accepting “of the lack of earnings and revenue growth under his tenure.
However, he noted that Zimpleman received criticisms when it came to the company’s underperformance in ROE improvement because it appears that it does not match the focus on fees. Kinar also observed that his strategy is bearing fruit in recent quarters. According to the analyst, Principal Financial Group Inc (NYSE:PFG) outperformed the group’s total returns since the financial crisis. The company’s total return post-crisis (March 2009 to present) was 906%.